Jan. 15 (Bloomberg) -- Pacific Investment Management Co.’s
Bill Gross, hurt by a wrong-way bet on Brazil last year, said
the nation is no longer a preferred emerging market for the
world’s largest fixed-income manager.

Pimco’s biggest funds were bullish on Brazil in 2013, a
wager that hurt performance. Gross wrote in a Twitter message a
year ago that the Brazilian currency, the real, was a better use
of cash than high-yield bonds. The real fell 13 percent against
the dollar last year, while U.S. high-yield bonds climbed 7.4
percent, based on the Bank of America Merrill Lynch U.S. High-Yield Index.

Brazilian bonds and currency represented the largest
holdings in the $11.5 billion Pimco Emerging Local Bond Fund as
of Sept. 30, according to Pimco’s website. Other Pimco funds
that blamed the Brazil wager for detracting from performance
were Gross’s Pimco Total Return, Pimco Low Duration, Pimco
Unconstrained and Pimco Commodity RealReturn Strategy.

Local-currency Brazilian notes lost 11 percent in dollars
in 2013 compared with the average 6.9 percent drop in emerging
markets tracked by JPMorgan Chase & Co. The Brazilian debt was
hurt by a combination of slow growth and accelerating inflation.
The real has tumbled 7.4 percent in the past three months, the
second-worst performance among 16 major currencies tracked by
Bloomberg after South Africa’s rand, on concern fiscal
deterioration will lead to a lower credit rating.